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How couriers are delivering in the digital age

Sarah Stowe
Today we live in a digital world, but when it comes to delivery nothing yet has replaced the old-fashioned task of getting an item from one place to another. Whether by courier or by post, a package has to be moved to its destination to complete the whole transaction. And that’s good news for those in the courier and logistics business.
 
This industry has typically been a business to business arena but the onset of online retail and its burgeoning delivery demands is broadening the service. 
 
According to IbisWorld report Courier Pick-up and Delivery Services in Australia (November 2013), Australian online spending increased at a compound annual rate of 26 percent in the five years to 2013 and online is predicted to support the sector’s expansion through to 2018-19.
 
“Overall industry revenue is expected to increase at a compound annual rate of 3.5 percent to reach $8.2 billion in 2018-19,” the report reads.
 
External influences on this sector include B2B services dependent on communication and information, demand from general warehousing and cold storage, the motor vehicle price index, household consumption expenditure and demand from online shopping.
 
According to the report, “Many industry players have moved to fill this need, heightening the level of competition within the industry as new entrants and competitive players have sought to cater to the emerging demand.”
 
Australian retailers have been slow to respond to the online trend but the overseas shopping trend has more than made up for this when it comes to globalised parcel delivery. Now the home-grown retailers have stepped up.
 
“For online retailers, the industry is the crucial last step in the sale process, with online stores relying on couriers to deliver purchases to customers. The goods sent by these markets are often small in size but high value, introducing a new set of service requirements for the industry to fulfil.
 
“While the industry has faced strong competition from Australia Post in the parcel market, it has still benefited from the rising demand for parcel delivery, with depot-to-point delivery the fastest growing industry service.”
 
Developing delivery networks remains one of the biggest challenges. “Australia Post has a mandate to provide letter services to even remote Australia and has the largest retail network in Australia,” the report reads. 
 
What stands in the way of the courier business expansion is the postal service, which also has a subsidiary, Star Track Express.
 
As competition hot ups, the ability for courier firms to deliver door-to-door will be favourable. Innovation in customer interaction, and increasing the size of the scale of operations will help the industry be more competitive with Australia Post, the report suggests.
 
IbisWorld is tipping greater competition from the postal giant in the parcel market but relying on there being no other significant changes in the organisation’s regulations for its five-year forecast. If there is any deregulation of the postal service, however, it is likely to benefit the courier trade.
 
New players in the courier business have come from existing operators in parallel transport industries, and these firms have added IT and supply chain capabilities that have boosted profitability.
This is an industry with low barriers to entry but considerable technological investment is required to keep a service in line with client expectations through the use of automated systems. “To grow to a large interstate or international business, good freight forwarding skills or access to international transport networks are required,” the report suggests. There is a low level of globalisation but this is increasing.
 
Just under 12 percent of the market share is held by two key players: DHL and Toll Holdings. The remaining 88.2 percent is divided between the two major supermarket chains offering increased online and delivery options across their retail portfolios, the overseas companies United Parcel Services, TNT, and Federal Express, the wholly-owned Australia Post subsidiary Star Track Express, franchised chains and independent businesses.
 

Franchise players in this sector include:

  • Australia Post [retail]
  • Couriers Please [metropolitan express parcel delivery]
  • Fastway Couriers [hub and spoke system for domestic parcel delivery, electronic freight]
  • InXpress [international and domestic express services, freight services, import express, dangerous goods]
  • Mailplus [mail collection and delivery, banking services, inter-office document exchanges]
  • Pack & Send [logistics solutions, excess baggage, unpacked and fragile goods, parcels and freight]
  • Star Couriers [hub and spoke non-express parcel distribution]